Each December, the IRS sets the mileage reimbursement rate for the following year. If businesses choose to reimburse their employees for work-related driving, this is the rate at which such reimbursement should be done. The IRS 2010 standard mileage rate is $.50 per mile.
An independent contractor calculates this amount for the IRS each year, based on the “fixed and variable costs of operating an automobile” in the previous year. These costs include fuel prices, as well as maintenance. The 2010 rate is $.05 lower than the 2009 rate of $.55 per mile. The IRS attributes this reduction to “generally lower transportation costs” as compared to the previous year (2008).
The mileage reimbursement rate has risen dramatically in recent years, mainly due to the sharp increase in gas prices over the past few years. For example, the rate in 2003 was $.36 per mile; in 2006 it was $.445 per mile; and in the second half of 2008, it was $.585 per mile.
See this article on the IRS web site for more information: http://www.irs.gov/newsroom/article/0,,id=216048,00.html
This article was written by Melissa L. Demorest, Associate at Demorest Law Firm.
I work for a home health care agency in Reed City, MI and they only reimburse me 30 cents per mile after the first 15 miles to and from my patients home. Is this legal? Can I turn my mileage into the state of michigan on my own rather then rely on my employer to reimburse me?
Mileage reimbursement is optional, so yes, this is legal. Instead of employer reimbursement, you can put mileage on your federal (IRS) tax return as a business expense. Consult an accountant for details.